SUMMARY: What's the fundamental reason why McDonald's rose to become the world's largest restaurant company? And why is the company now faltering? This article answers those two questions — which are intertwined. Then it goes on to lay out an innovative solution for reversing the company's death spiral and putting it back on track to being the premier provider of the true fast-food-experience. (Written December, 2002.)

For 30 years pundits have propounded theories on the phenomenal rise of McDonald's. These analyses have ranged from psychological (“the golden arches symbolize giant nurturing breasts”) to sociological (“McDonald's stands for our collective American experience”) to technological (“they brought production-line processes to hamburger-cooking”) to marketing (“they made the company logo and Ronald McDonald as recognizable as Santa Claus”) .

Each of these theories is interesting and perhaps even partially true. But they all miss the mark. They all fail — in this particular pundit's opinion — to identify the fundamental reason why in the last half century McDonald's rose to the world's largest restaurant company.

In addition, since McDonald's sales began faltering in the latter 1990's, McDonald's executives have thrown virtually every conceivable program at the problem. These antidotes have ranged from new slogans to new games to new ads to new ad agencies to new menu items to new promotional bundles to new production system to new pricing to company re-orgs to mystery shopper program to table service to entire new McD restaurant formats. In all history no restaurant company has done as much to attempt to stem a sales-slide as McDonald's has since 1995. The company's efforts have been prodigious and impressive.

Yet all this has failed to solve the sales problem. It seems like the more the company does, the bigger the problem becomes. Indeed, Wall Street appears to be wondering if the problem is fixable at all. So what's the solution?

The Fundamental Reason Why McDonald's Rose to #1 … and Why It's Now Faltering

The first step to resolving this problem lies not in “doing something,” it lies in “thinking about something.” For McDonald's to resolve its sales tailspin, company leadership must discover the correct answers to two key questions:

1. What was the FUNDAMENTAL CAUSE behind McDonald's phenomenal rise in its first 40 years?

2. What is the FUNDAMENTAL CAUSE behind McDonald's sales decline in the last six years?

If the company's leadership fails to discover the correct answers to these two questions, the company will continue its tailspin.

So at this point Correll Concepts will throw in its two cents, which is this.

McDonald's rose to #1 because for 40 years McDonald's delivered the superior fast-food experience. Or, put another way, McDonald's delivered a fast-food experience that surpassed that which was delivered by its competitors. Simple as that — nothing more, nothing less.

So why, beginning in the 1990s, has McDonald's gone into a seeming death spiral? It's because, beginning in the 1990s, McDonald's ceased to deliver the superior fast-food experience.

I suspect that at this point you might be scoffing: “Fast-food experience? Fast-food is junk. Fast-food went out with the 1970s. In fact, we try NOT to deliver a fast-food experience.”

Well, for a moment allow me to be the devil's advocate. Flying in the face of convention, I maintain that a true fast-food experience is a GOOD thing, something that's desired by nearly everyone.

The True Fast-food Experience

A true fast-food experience, as I define it, is a restaurant experience in which the customer encounters (a) fast service, (b) simple decisions, (c) freedom from errors, (d) well-maintained facilities, (e) clean premises, (f) fully-stocked condiment and drink stations, (g) pleasantly-groomed, professional-acting personnel, and (h) products consistent with what s/he envisions receiving (or products consistent from time to time and place to place). These eight conditions constitute a true fast-food experience.

As a prodigious half-century consumer of fast food, I believe that for its first 40 years McDonald's surpassed all others in delivering the true fast-food experience. Both qualitatively and quantitatively it beat the competition in this acid-test arena. It delivered a higher level of true fast-food experience than its competition delivered. And, most importantly, it delivered the true fast-food experience to a greater percentage of customers than its competitors delivered.

But today McDonald's no longer enjoys preeminence in delivery of the true fast-food experience. On a system-wide basis, McDonald's service is now as slow as its competitors' service, its menu is as confusing as its competitors' menu, it delivers just as many errors and oversights as its competitors deliver, its buildings look as poorly maintained as its competitors buildings, its parking lots contain as much litter as its competitors' lots, its dining room and restrooms are just as dirty as that of its competitors', its personnel look just as sloppy and act just as indifferently as its competitors' personnel, and its products are just as inconsistent as its competitors' products.

In short, as a true fast-food experience provider, McDonald's is now ON PAR with its competition. Meaning, after decades of leadership the company has recently managed to achieve the status of competitive CO-EQUAL — a status tantamount to an endless kiss of death.

The Cause

Just as there are many theories explaining how McDonald's became #1, there also are opinions on why the company is now slipping. These include (a) “society is changing and people now want an upscale dining experience,” (b) “you just can't get good help any more,” (c) “the fast-food segment has become saturated and too competitive,” (d) “the company over-expanded,” and (e) “people are getting tired of McDonald's food and want a different taste.”

Although there may be a smidgeon of truth in each of these, none is the real reason for why McDonald's has entered a sales-sliding tailspin. That's because none of them are a valid explanation for why McDonald's delivery of the true fast-food experience is now no better than that of its competitors.

In addition, some McDonald's operators complain that the company's new “made-for-you” production system has been gumming up the works and causing bad service. However, based on my observation as a customer I'd have to say that this opinion is a red herring. I've noticed that when a store crew seems to be focused, hustling, and knows what it's doing, the production system seems to deliver product in a timely manner. But when the crew appears inattentive, slow, and confused, the production system seems to “fail.”

So what's the cause of the company's decline in true fast-food experience delivery? For my money, the cause is deteriorating store crew performance. That, of course, is an easy, obvious answer. So we'll dig deeper with a follow-up question: What's the cause of deteriorating store crew performance?

At this point the drums are probably beating — “the reason for bad service is that businesses can't get good help any more.” But, as compelling as that might sound, it doesn't cut it here. If that were the cause of McDonald's operational decline, EVERY restaurant — including every McDonald's restaurant and every restaurant of its competitors — would be delivering lousy product and service. And that's clearly not the case. So the general system-wide decline in McDonald's store performance cannot be pinned to a “decline in workforce quality.”

So what exactly IS the cause of McDonald's deteriorating store crew performance? In this writer's opinion, McDonald's has been undergoing deteriorating crew performance because the company's traditional performance development and motivational systems have gradually lost their effectiveness. These programs — whatever they are — no longer have the power to focus and motivate store crews to deliver a high level of true fast-food experience on a consistent basis. In other words, the old management and motivational systems need replacing.

The Solution

Whenever a team fails to deliver desired performance, it's always because one or more of the following four conditions exists:

1. The team lacks AWARENESS of what actions and outcomes constitute desired performance;

2. The team lacks the ABILITY to deliver desired performance;

3. The team lacks the RESOURCES to do the performance; or

4. The team lacks the MOTIVATION to do the performance.

To resolve a performance deficiency, a company must identify the cause of the deficiency (one or more of the above four conditions) and then replace that condition with the opposite condition.

In this situation, the “desired performance” that we seek is delivery of the true fast-food experience. Since store team performance (overall) has been deficient in this area, we must answer the question “Which of the above four conditions have been causing deficient performance in delivery of the true fast-food experience?”

Given McDonald's current state of training and operational technology, it's reasonable to conclude that most store teams have the ability and resources to deliver a true fast-food experience. So that eliminates possible causes 2 and 3. This leaves possible causes 1 and 4. Indeed, what McDonald's store teams lack is (a) awareness of what specific actions need to be taken to deliver a true fast-food experience and (b) the motivation to take those actions. In short, to rise out of its sales slide, McDonald's leadership must focus on implementing a program that will install those two conditions throughout its restaurants system-wide.

A Real-time, Customer-driven Performance Feedback and Motivation System

Workers of today are essentially the same as workers of yesterday. Human beings haven't changed in a hundred thousand (or more) years. But the situation which human beings grow up in and work in changes. Always has, always will. This continuously-changing human situation exists because of continuously expanding technology which, in turn, creates continuously evolving life styles.

So, contrary to what many executives assume, the performance deficiency within their company is NOT caused by a deteriorating workforce. Rather, it's caused by their company's lack of adaptation to the changing life style and perspectives of the workforce. More specifically, it's caused by ineffective “motivation systems.”

To break out of its tailspin, McDonald's must institute an effective store team performance feedback and motivation system. For maximum impact, such a system must be real time — meaning, it must (a) deliver performance feedback to the store team on a real-time basis and (b) deliver motivating consequences (i.e., positive reinforcement) on a real-time basis. Further, the feedback and motivating consequences must be engineered to produce a particular desired performance. That particular desired performance is actions that create a true fast-food experience AS PERCEIVED BY THE CUSTOMER.

With that in mind, here's what McDonald's needs to do to reverse its current ill fortunes.

1. Create awareness within store team members of what constitutes the true fast-food experience. For easy reference, we'll hereafter refer to the true fast-food experience as the McDonald's Experience. To get it, the first step is to define the McDonald's Experience in terms of the eight conditions previously outlined for a true fast-food experience. In communicating the McDonald's Experience to team members, describe it in terms of both the macro view and the micro view. For the macro view, describe the overall objective behind delivering the McDonald's Experience — what it is, what it does, why it's important. For the micro view, describe the specific actions and outcomes needed for achieving the overall objective.

2. Install a computer-based customer feedback kiosk in every restaurant. A small “voting booth” kiosk in each store would serve the purpose. It would be equipped with a CPU and touchscreen. Customers would visit it while leaving. This makes it possible for them to deliver immediate, easy, anonymous feedback.

3. Install a feedback program that makes it possible to quantify team performance. The feedback program would pose three yes/no questions:

(a) Were you fully satisfied with the food you received today?

(b) Were you fully satisfied with the service you received today?

(c) Were you fully satisfied with the overall buying/eating experience you had today?

Whenever a customer responds “no” to one of the questions, a follow-up question would appear which asks:

“What was it about the food (or service or overall experience) that caused you to be less than fully satisfied?”

This would be followed by a menu of possible answers to select from.

4. Make "real-time key indicator feedback" available to the store team in 30-minute intervals. The computer program would calculate the positive response percent to each question in 30-minute intervals. This then would be communicated to the store team by one or more prominently-displayed monitors or communication devices within the work area. If possible, the information would be displayed in graph form with a data point for each 30-minute interval of the day. For each shift and each day there would be a positive response percent goal that the team would be working toward for that shift and that day. In addition, the answers to the follow-up question also would be displayed for each 30-minute interval, so needed corrective action could be instantly identified and enacted.

5. Set up the system to screen out phony feedback. To insure validity, any phony feedback or duplicitous feedback must be eliminated. This could be accomplished by printing a transaction number on each customer receipt. Customers would enter the transaction number for giving feedback. The customer receipt would have a couple lines encouraging customers to give their feedback and telling them to use the transaction number for it. The feedback system would be linked to the store's POS system and, thereby, any “untransacted feedback” could be identified and screened out.

6. Set up a similar feedback system for drive-thru customers. Drive-thru receipts also would include a transaction number plus a local phone number to call for giving immediate feedback. The local phone number would be answered by a computer in the restaurant. It would include a voice-recognition-driven software program that would orally take the customer through the above-described Q&A feedback process. This feedback then would be transmitted to the restaurant team the same way as the in-store feedback is.

7. Encourage feedback with guaranteed anonymity and surprise rewards. For this system to work, it must be set up to insure anonymity (whenever a customer desires it). In addition, to insure a broad base of feedback, it would help to incorporate a rewards program with it, whereby feedback-givers earn a chance to win a small prize for giving their feedback (a great opportunity for the company to install a powerful bounce-back promotional program).

8. Link each restaurant's feedback system to a central database. Set up a data collection program via the internet whereby the feedback results of each restaurant are tabulated in a central database and updated in 3-hour intervals. This database would enable near-real-time information on the daily-weekly-monthly “McDonald's Experience Rating” of every restaurant, area, and region within the country. This indicator should be made a key factor in the company's management bonus program and in the franchisee evaluation program.

9. Make the feedback positively reinforcing for store team members. For this system to motivate team members to achieve long-term performance improvement in delivering the McDonald's Experience, the team members MUST receive effectively delivered positive reinforcement for progress and right actions. Without that, the program will eventually fail or, at best, achieve sub-optimal results. Reinforcement is the process of giving someone something they like as a consequence for something they've done right. This is how the program becomes motivating to team members. So the program must be constructed to deliver positive reinforcement along with the feedback. This will require creative thinking, but it can be done. For further discussion on this topic, see Effective Reinforcement: The secret is in HOW it's delivered. An additional good resource is the book Performance Management by Aubrey Daniels. Daniels runs a long-established consulting firm specializing in the application of behavior-based motivation principles to business management — Ph: 770-493-5080, www.aubreydaniels.com.

TO SUM UP: Installing this real-time, customer-driven performance feedback and motivation system would result in a rising percentage of customers receiving a true fast-food experience. This, in turn, would result in a decreasing customer rejection rate and an increasing customer return rate. All of which would end the company's death spiral and put its per-unit sales back on an uphill climb.

For more ideas and for possible consulting for implementing a real-time, customer-driven feedback and motivation program for your company, contact John Correll — 734-455-5830 or john@correllconcepts.com.

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This article was authored by John Correll.
Response may be directed to john@correllconcepts.com.